Earnings season kicks off on Wednesday with the Las Vegas Sands Corp. and Monarch Casino reporting first-quarter results.
Obviously, those results will be meaningless. The only points worth raising in conference calls or to search for in news releases will be about when gaming will reopen and how long it will take for business volumes to rebuild.
There does appear to be some consensus that reopening will be phased in slowly, with lots of social distancing, disinfecting and health monitoring.
One question is whether casinos will be treated differently than other businesses. Casinos are not essential businesses—except in an economic sense, in destination markets such as Las Vegas and Atlantic City. So, they won’t be opening early, as may be the case with some industrial and agricultural operations.
They might even lag behind restaurants in reopening, given the little evidence to date about public attitudes and public policy. An opinion poll showed just 10 percent of the population believe casinos should get financial aid, and casinos have been left out of the Paycheck Protection Program.
If these are indicators, policymakers might be inclined to put casinos last in line to reopen. After all, why allow people to congregate in close quarters to benefit an industry without popular support? Again, an exception would be a place like Nevada, where gaming is economically essential. But the irony there is that reopening may generate little economic benefit, because most Las Vegas customers have to fly in or drive 200-plus miles to get there.
No doubt, casino executives are talking with legislators and governors. It will be interesting in the upcoming conference calls to hear if CEOs have a sense of how various jurisdictions will reopen and how gaming will fare in reopening plans.
iGaming: A Little Relief
Revenue numbers out of New Jersey and Pennsylvania confirm what common sense would lead one to expect: with brick-and-mortar casinos closed, more gamblers are turning to the internet to play.
In New Jersey, online revenues jumped 66 percent in March to $64.8 million. Growth would have been even greater except casinos didn’t close until mid-month. Legacy brick-and-mortar gaming revenues dropped 61 percent to $85.5 million.
In Pennsylvania, legacy gaming was down the same 61 percent to $120.7 million. The less-developed online operations generated $21.1 million.
As has been evident in all state revenue reports for March, the decline in brick-and-mortar gambling began before casinos closed. In the first half of March, average daily revenues in Atlantic City fell 25.8 percent compared to last year. Most states have reported similar declines.
The New Jersey and Pennsylvania results present a few interesting cases. The Golden Nugget in AC generated $23.3 million from online gaming, which was triple the $7 million the casino took in. In Pennsylvania, Boyd’s Valley Forge Casino also generated more revenue online than in the building—$4.7 million to $4.4 million.
No doubt, casino companies will increase those online numbers as their physical casinos remain closed and they market to online players.
Some companies expect to rise. London-listed 888, for example, is forecasting revenue growth this year. And when sports resume playing later this year, sports betting revenues could be significant in jurisdictions that allow online sports wagering.
But for companies that are primarily brick-and-mortar—and that’s basically the entire casino industry—real relief will only come when they’re allowed to throw open their doors.
